The Gambia Investment Law Regulation (GIEPA presentation)


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Presentation of Omar Garcia-Bolivar in The Gambia on legal business climate and investment law reforms.

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The Gambia Investment Law Regulation (GIEPA presentation)

  1. 1. Omar E. Garcia-Bolivar Gambia Investment and Export Promotion Agency Act 2010 June 13, 2011. Banjul.
  2. 2. Omar E. Garcia-Bolivar INDEX  Best international practices for investments.  Issues with the GIEPA Act.  Some recommendations.
  3. 3. Omar E. Garcia-Bolivar BEST MARKETING TOOL Sound business climate
  4. 4. Omar E. Garcia-Bolivar Omar E. Garcia-Bolivar SOUND BUSINESS CLIMATE  Business opportunity.  Easy to do business.  Low cost.  Good infrastructure.  Access to credit.  Rule of law.
  5. 5. Omar E. Garcia-Bolivar A COUNTRY IN AFRICA  Small.  Difficult to reach.  Not well known.  Competition by close larger countries.
  6. 6. Omar E. Garcia-Bolivar MAURITIUS  Population 1,275,323  Doing business rank: 20/183  FDI inflows 2006-2010: US $ 256,680,712  GDP: US $ 8,588,729,727  GNI Per Capita (US$)7,240.00
  7. 7. Omar E. Garcia-Bolivar Omar E. Garcia-Bolivar IN ADDITION TO…  Foreign investment policy:  Investment law as a goodwill sign.  Plan investment treaties (BITs, FTA):  Content  Countries to target  Double taxation treaties.  A rational system of incentives.  Promotional strategy.
  8. 8. Omar E. Garcia-Bolivar Omar E. Garcia-Bolivar TAX INCENTIVES  Limited in time for beneficiaries and for granting agency.  Granted automatically upon meeting the requirements, e.g.: claim at time of tax return.  Contributor not relieved from compliance, e.g.: file tax return.  Subsequent supervision.  Administered by revenue authority.  Tax credits and investment allowances directly related to the amount invested are better options.
  9. 9. Omar E. Garcia-Bolivar Omar E. Garcia-Bolivar EXPORT PROCESSING ZONES  Hassle free regime.  Trade facilitation measures in place.  Imports free of duties and VAT.  Simplified tax regime.  Exports not subject to tariffs or restrictions.  Effective monitoring and supervision by Customs authority.  No subsidies in utilities, communications or infrastructure.
  10. 10. Omar E. Garcia-Bolivar Omar E. Garcia-Bolivar WHAT NOT TO DO “ The Gambia‟s investment promotion authority confers a special status on investors, who are then awarded special investment certificates that entitle them to benefit from incentive packages. The investment promotion authority also states that, „Apart from these specific incentive packages, others can be negotiated with the Agency depending on the strategic nature of the investment.‟ To the extent possible, qualification for incentives should be automatic, with investors receiving them if they satisfy the conditions required by tax and other laws. Investors‟ costs increase if they are asked to go through an approval process. Moreover, most investment promotion agencies lack the capacity to administer incentives —especially tax incentives.” Source: Incentives and Investments: Evidence and Policy Implications Investment Climate Advisory Services of the World Bank Group. December 2009
  11. 11. The business climate in The Gambia  Opinion of the business community:  Too many and high taxes.  Expensive and unreliable electricity.  Difficulties to access to credit.  Access to/from the world: hard.  Doing business indicator: 146/183 Omar E. Garcia-Bolivar
  12. 12. Omar E. Garcia-Bolivar Omar E. Garcia-Bolivar THE GIEPA ACT • It is an average law. • Some terms need to be defined. • Although it intends to create a rule based incentive system, some discretion is present. • According to the Act, GIEPA receives and process the applications and if approved, it recommends the Minister to grant the certificate to the applicant. This procedure involves discretion of the Board of GIEPA and it is very likely to cause delays and excessive costs for the applicants. • GRA in turn recommends to Minister of Finance for the tax or export component of incentive package. • No general time limit to cap the incentives. • Excessive, distortive and contradictory incentives, e.g. tax holiday and tax depreciation. • Universal arbitral consent. • MSME component.
  13. 13. How to attract business? Omar E. Garcia-Bolivar Sound business climate Regulati
  14. 14. Omar E. Garcia-Bolivar Omar E. Garcia-Bolivar Recommendations  Look closely at the law again.  Others:  Streamline the process of incentives.  Have GRA actively involved.  Try to emulate one-stop shops.  Diminish discretion.  Subsequent supervision.  Database of MSME to matchmake.  Play “dummy” with other MSME provisions.
  15. 15. Omar E. Garcia-Bolivar Omar E. Garcia-Bolivar End  Thank you.